Christine Lagarde has decided to step down as the managing director of the International Monetary Fund (IMF).
The development comes hours before a vote on her nomination to become the head of the European Central Bank (ECB) and said that she would leave the IMF on September 12.
"With greater clarity now on the process for my nomination as ECB president and the time it will take, I have made this decision in the best interest of the fund," she said.
"The executive board will now be taking the necessary steps to move forward with the process for selecting a new managing director."
In a separate statement, the IMF Executive Board said that it has accepted the resignation of Lagarde and expressed its "greatest appreciation" for what she did for the institution.
The former French cabinet minister has been head of the IMF since 2011.
If her ECB nomination is approved, she will become the central bank's first-ever female leader, responsible for the euro and the monetary policy of the eurozone.
Recently, amid the IMF row for Pakistan, the US has communicated its "strong views" on an IMF bailout package to cash-strapped Pakistan and sought "conditionality", a top State Department official has said, amidst concerns in the Trump administration that the aid could be utilised to pay off the Chinese debts.
Pakistan last month reached an agreement with the Washington-headquartered International Monetary Fund (IMF) for a USD 6 billion bailout package aimed at shoring up its finances and strengthening a slowing economy as tries to overcome a ballooning balance-of-payments crisis.
The US has serious reservations over global lenders like the IMF providing a bailout to Pakistan to pay off Chinese debts.
"There is a discussion about the conditionality what we think would be appropriate for an IMF package to Pakistan," according to senior State Department official (South and Central Asian Affairs) Alice G Wells.
Responding to questions from lawmakers during a Congressional hearing last week, she told House Foreign Affairs Subcommittee for Asia, the Pacific and Nonproliferation that while the US has not seen the IMF package yet, there has been an agreement reached between the IMF and government of Pakistan.
"We have communicated our strong views and Secretary (Mike) Pompeo has also done so publicly on the need for any package to include a real structural reform to reinforce..." Wells said when Congressman Brad Sherman said it looks like that the IMF loan is going through.
"Does treasury just do what they want for checking off some economic boxes or since this is the single most important thing we do with regard to Pakistan do they listen to you?" he asked.
(With PTI inputs)